July 1 (Bloomberg) -- Senator Rand Paul has preached the
political peril of being too close to financiers as he gears up
for a likely 2016 presidential bid.

“We cannot be the party of fat cats, rich people, and Wall
Street,” the Kentucky Republican told the audience at the
Freedom Summit in New Hampshire in April. “Corporate welfare
should once and for all be ended.”

At the same time, the founders and employees of Mason
Capital Management, a $13.6 billion New York hedge fund, have
become leading contributors to Paul’s political aims. The hedge
fund has offices in London and San Francisco and offers clients
offshore investments through a limited partnership in the Cayman
Islands, among other strategies.

Company co-founder Kenneth Garschina has also given
$250,000 -- the single-biggest contribution -- to America’s
Liberty PAC, a so-called super political action committee run by
longtime supporters of Paul. He has contributed $15,100 directly
to Paul’s campaign or to funds the senator controls. Michael
Martino, Garschina’s co-founder, has given $12,600 to Paul’s
campaign and funds.

In all, 17 of the company’s 33 employees have given at
least $75,000 to Paul and funds he controls since he started his
first U.S. Senate campaign in 2010, according to Federal
Election Commission data compiled by Bloomberg. Mason Capital
staff members have been Paul’s second-largest source of campaign
funds, according to Opensecrets.org, a website operated by the
nonpartisan Center for Responsive Politics.

‘Top Tier’

While Rand Paul hasn’t declared his intent to run yet and
isn’t a shoo-in for the nomination, he’s in the “top tier” of
potential presidential contenders for 2016, said Kevin Madden, a
former senior aide to Republican Mitt Romney in his 2012
presidential bid. The freshman senator is buoyed by a base of
libertarian and Tea Party followers he inherited from his
father, former U.S. Representative and three-time presidential
candidate Ron Paul of Texas. Rand Paul is also hoping to pick up
some of Romney’s Wall Street donors.

“Rand is looking to lots of different places for financial
backing and that would certainly be one of them,” said Doug
Stafford, Paul’s former chief of staff, now the executive
director of RAND (Reinventing a New Direction) PAC, Rand Paul’s
leadership committee. “And if he chooses to run, his campaign
will be well funded.”

Garschina and Martino have built Mason Capital Management
in the last 14 years into an international hedge fund with $13.6
billion in gross assets under management as of Dec. 31,
according to a regulatory filing. Since the beginning of 2010,
Garschina and Martino have personally donated more than $800,000
combined, mostly to Republicans, including the Pauls and others
who advocate for smaller government and lower taxes.

‘Founding Fathers’

In 2009, Garschina made one stray donation to a Democrat:
$2,400 to former Senate Banking Chairman Chris Dodd, who was
weighing new trading and banking rules for Wall Street.

Garschina made few political donations before 2010 and has
largely kept out of the spotlight, except for a $2 million
contribution last year to the Cleveland Clinic’s Digestive
Disease Institute where his father-in-law and grandmother both
underwent colon surgery, according to a fall 2013 article in one
of the clinic’s internal publications.

In a brief interview, Garschina hinted at having a
libertarian view of the world, though he stopped short of
discussing specifics on issues such as taxation and regulation.
“I certainly believe in liberty and the constitution, as the
founding fathers did,” he said. “I don’t think any different
than most Americans.”

Garschina said he likes to avoid publicity. Stafford, who’s
running Rand Paul’s unofficial exploratory bid for president,
declined to comment about Garschina’s ties to the effort.

Political Science

“I’m not a very public person and would rather not have
something written about myself,” Garschina said. His wife,
designer Sara Story, and their vacation home outside of San
Antonio, Texas, were both featured in an April article of
Architectural Digest.

Martino, who declined to comment for this story, keeps an
even lower profile. His basic biography includes a degree in
political science from Fairfield University, an MBA in finance
and international business from New York University and stints
at Oppenheimer & Co. Inc. and GE Capital Corp. prior to founding
Mason. He donated $100,000 to a super-PAC supporting Newt
Gingrich’s presidential run and is on the national council of
the American Enterprise Institute, a free-market think tank in
Washington.

Paul’s largest donor is the super-PAC Club for Growth,
which has given him about $100,000 over the last four years,
according to data compiled by the Center for Responsive Politics
and the FEC. Club for Growth supports Congressional candidates
who “believe in growth policies, limited government, low taxes
and economic freedom,” according to its website.

Super-PAC Donations

Garschina’s $250,000 donation to America’s Liberty PAC made
him its largest donor and accounted for more than half of the
$445,000 it has raised thus far, according to FEC data. The fund
was founded in 2012 with $170,000 in seed money. Most of that
came from three donations of $50,000 each from former Anheuser-Busch Chairman and Chief Executive Officer August Busch III, oil
well executive Carl Davis and Rand Paul’s RAND PAC. Super-PACs
are required to be run independently from any candidate they
support, and they can, as a result, accept unlimited
contributions from individuals.

Those rules don’t reflect reality, said Tara Malloy, a
senior attorney at the Campaign Legal Center, a non-partisan,
non-profit group focused on strengthening campaign finance laws.
Super-PACs “are making a mockery of independence,” Malloy
said. Every major candidate in the 2012 presidential election
had his or her own super-PAC, and there was very little
separation between the funds and the candidates, she said.

‘Friends, Families’

“The super PACs were often run by friends or family,”
Malloy said. “They were often financed by the candidate’s
friends, families and other big contributors.”

America’s Liberty PAC is staffed with people who worked for
Rand or Ron Paul. Its director, John Tate, ran Ron Paul’s last
presidential campaign, was an adviser to Rand Paul and played a
“crucial role” in recruiting staff members for his 2010 Senate
run, the senator said last year. The super-PAC spent $95,000 in
2012 trying unsuccessfully to unseat Senator Claire McCaskill, a
Missouri Democrat.

“I believe with my friend John at the helm, America’s
Liberty PAC will establish itself as not just a critical ally of
the Tea Party, but a feared political force in Washington, D.C.
–- something the liberty movement desperately needs,” Rand Paul
told Florida’s Sunshine State News in November.

Non-Profit Group

That’s not the super-PAC’s only link to the Pauls.
America’s Liberty PAC paid the Campaign for Liberty, a non-profit group run by Tate that was founded and is chaired by Ron
Paul, $10,000 last year to sponsor a conference. The super-PAC
also paid Matthew Burrow, the director of membership at the
Campaign for Liberty, $3,105 in consulting fees and $2,740 in
wages since September. The Treasurer for America’s Liberty PAC,
Elizabeth Newberry, is also the treasurer for the charitable arm
of the Campaign for Liberty, according to FEC data and tax
filings.

Tate didn’t return an e-mail or messages left for him at
the Campaign for Liberty. There is no formal legal affiliation
between America’s Liberty PAC and the Campaign for Liberty,
Stafford said.

Garschina’s giving isn’t limited to politicians. The Ludwig
von Mises Institute in Auburn, Alabama, a libertarian-education
organization, got $59,000 in 2012 through a non-profit
foundation Garschina established three years ago with his wife.
Ron Paul sits on the Mises Institute’s board and is a
distinguished counselor there.

‘Watch List’

The Story Garschina Charitable Fund also donated $75,000 to
another libertarian-leaning think tank, the Federalist Society
for Law and Public Policy Studies, and $100,000 to the Manhattan
Institute for Policy Research in 2012, according to the most
current tax data available. Garschina joined hedge fund magnates
Paul Singer, founder of Elliot Management Corp., and Dan Loeb,
who founded Third Point LLC, on the board of the Manhattan
Institute for Policy Research in 2011, according to the
Institute’s tax records.

The group describes itself on its website as “an important
force in shaping American political culture and developing ideas
that foster economic choice and individual responsibility.” The
American Federation of Teachers last year put the three hedge
funds on a “watch list” of money managers that advocated
through the Manhattan Institute for eliminating pension plans in
favor of private 401(k) retirement programs while taking
millions in fees to manage pension investments.

“This guy has decided to make it his business to openly
work with a group, and serve on their board, that wants to end
pension funds,” said Dan Pedrotty, the director of pensions at
the AFT. Mason Capital counted pension programs from Rhode
Island, New Mexico and Florida as clients last year, he said.
“We view that as a huge conflict of interest and a stupid
business decision.”